January 31, 2011

Today, United States District Judge Roger Vinson ruled that the entire health care overhaul is unconstitutional, but he stopped short of ordering the federal government to stop implementing it. Specifically, Judge Vinson wrote in his 78-page opinion that “Congress overstepped its legal bounds when it included the provision requiring nearly all Americans to buy insurance” and that “Congress has no right to require Americans to purchase a product.”

The impact of this decision will likely catapult the issue to the Supreme Court given another recent decision in the United States District Court for the Eastern District of Virginia. That opinion, issued last year by Judge Henry E. Hudson found that the individual mandate, requiring almost every citizen to obtain health insurance, was unconstitutional. Despite her efforts, Judge Vinson denied a motion by Pam Bondi, Florida's attorney general, to immediately halt implementation of the healthcare reform act.

The U.S. Department of Justice said it plans to appeal the decision. It is also considering whether it needs to ask for a stay, which would temporarily stop the judicial order issued by the court or in other words, suspend the case. In addition, Senate Majority Whip Dick Durbin (D-Ill.) has called a hearing on the constitutionality of the law to be held on Wednesday before the full Judiciary Committee.

Background

Shortly after the Affordable Care Act (ACA) passed and was signed into law last March, former Florida Attorney General Bill McCollum filed a lawsuit in the U.S. District Court for the Northern District of Florida, asserting that a number of provisions were unconstitutional. Shortly after, attorney generals or governors of 26 other states joined the suit, as well as the National Federation of Independent Businesses (NFIB). The other states are: Alabama, Alaska, Arizona, Colorado, Georgia, Indiana, Idaho, Iowa, Kansas, Louisiana, Maine, Michigan, Mississippi, Nebraska, Nevada, North Dakota, Ohio, Pennsylvania, South Carolina, South Dakota, Texas, Utah, Washington, Wisconsin and Wyoming.

Those who support the individual mandate assert that it “is pivotal to delivering key insurance industry reforms in the law, such as a ban on denying patients over pre-existing conditions. It’s due to go into effect in 2014,” according to POLITICO. Supporters also assert that Congress has the right to regulate the insurance market because it is unique— “it’s fair to assume that every single person will need health care at one point in his or her life.” They claim that if people are not insured, “their costs will have to get picked up by other consumers, driving up rates for everyone and putting them in the insurance market whether they plan to or not.”

In addition to the individual mandate, the states and NFIB argued that the “law’s mandatory expansion of the Medicaid program commandeered the states into federal service.” Judge Vinson however ruled with the federal government on this point, “arguing that the states can leave Medicaid at any time.”

Opinion

Judge Vinson asserted in his opinion that “Because the individual mandate is unconstitutional and not severable, the entire Act must be declared void.” Nevertheless, he recognized the difficulty in making his decision because of the “indeterminable implications” it will have.

With respect to the issue of the individual mandate, the key legal question was whether the Constitution’s Commerce Clause gives Congress the power to regulate the decision to buy insurance. The states and NFIB argued during oral arguments in December that the Congress has no constitutional right to force Americans buy insurance coverage. They said that while Congress is authorized to regulate activity, they could not regulate inactivity— or not buying insurance. Judge Hudson in Virginia, as argued by Virginia Attorney General Ken Cuccinelli, accepted this argument. Likewise, Judge Vinson found that Congress had overstepped its powers.

Discussion

The opponents of health reform are “likely to hail the ruling as another sign of the law’s imperfections.” While dozens of other cases challenging the law are pending or have been thrown out, only four judges have ruled on whether the requirement to buy insurance is constitutional. Two judges, both appointed by Republican presidents, have struck down the law or its main provision (the individual mandate). Two other judges appointed by Democrats have upheld the legislation as constitutional.

The U.S. 4th Fourth Circuit Court of Appeals in Richmond, Va., has agreed to expedite its review of the Virginia case, scheduling hearings for May. The next step for Judge Vinson’s decision will be an appeal to the U.S. 11th Circuit Court of Appeals.

The Senate Judiciary Committee hearing on Wednesday will likely involve some of the main strategies and arguments that Republicans and Democrats will use in the upcoming battles in the Court of Appeals and ultimately the Supreme Court. The hearing might also present an opportunity for Senators to bring into the record information that may later be used by appellate judges in making their ultimate decision on the issue, although the legal authority of Senate hearings is very low.

Ultimately, the decision may come down to one vote once it reaches the Supreme Court, which presently leans more conservatively. Unless there are significant changes or details that occur on appeal, it seems more likely than not that the Affordable Care Act, or at least the individual mandate is on a track to be heard at the Supreme Court.

Comments

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As to how such a development would relate to healthcare services, if you make it too easy for people to access healthcare and too difficult for insurance companies to provide it, you will at the very least, cause a shortage of services. Without the regular balancing mechanism of price and profit, such needing to be free from government interference, you will see those in power assigning the scarce amount of services to selected groups.